?State-controlled? is the new in thing in the new global order. As the global financial crisis took its toll and governments across the world came forward to pump in money to save yesteryear?s private giants, investor preference in the Indian markets also showed a definite inclination for PSU stocks.
State-owned Oil India?s initial public offering getting 31 times oversubscribed is just an indication of the investors? appetite for PSU stocks.
In the last one year (till September 10, 2009), PSU stocks (excluding public sector banks and finance companies) have recorded substantially higher returns and the government?s market capitalisation in 48 listed PSU companies has gone up by a whopping Rs 1.88 lakh crore, an increase of 21.6%.
In the last one year, while the BSE Sensex increased 10.6% to 16,216.86 points as on September 10, 2009, the BSE PSU Index gained 22.6% to 8,447.37 points.
The sharp rally in PSU stocks has also quelled fears about investor appetite for new offerings, which had waned because of tepid market debut of stocks like Adani Power and NHPC. Analysts expect the government to sell more stakes in state firms as it looks to raise funds and cut a ballooning budget deficit in view of its increased spending.
The stocks of navaratna companies in particular are in great demand. For instance, National Mineral Development Corporation has fetched the largest increase in wealth, with the government stake in the company now worth Rs 31,244 crore more than it did at the beginning of the study period. From a price of Rs 286.2 in September 10, 2008, the share is currently worth Rs 366.3. And the government stake in the company was intact at Rs 390 crore as on June 30, 2009.
In hot pursuit is another company in the public sector, MMTC, where the government?s stake gained an extra Rs 25,059 crore during this period.
Though the share price rise has been spectacular in some other cases, they have not translated into larger wealth for the government given the inherently small size of these PSUs.
For example, Gujarat Mineral Development Corporation Ltd has seen its share price rise by over Rs 18.10 in terms of absolute share price, but that added just Rs 1,519 crore in wealth. An increase of Rs 26.75 in share price in the case of Neyveli Lignite translated into Rs 4,199 crore in incremental wealth.
Not surprisingly, NMDC has topped the charts, with a gain of Rs 31,244 crore in the last 12 months. A significant contributor in government?s wealth creator, IOC and NTPC, which were placed third and fourth in terms of incremental wealth, are also worth mentioning.
